July 24, 2010

 

Russia may delay grain intervention sales amid drought fears
 

 

The Russian government may delay the start of grain intervention sales aimed at containing prices rising on drought fears, which had been scheduled for August 4, Agriculture Minister Yelena Skrynnik said on Friday (July 23).

 

"The starting time of intervention sales may be adjusted following the request of first deputy Prime Minister Viktor Zubkov and regional governors," Skrynnik said following a meeting in the government dedicated to drought.

 

The government plans to sell more than 3 million tonnes of feed and milling grain to cushion damage from a severe drought, the Agriculture Ministry said.

 

At the meeting, some regional governors asked the government not to auction its intervention grain but sell it directly to regions hit by drought at fixed prices. Zubkov asked the Agriculture Ministry to consider this proposal and take additional steps to guarantee that the grain reaches animal breeders and millers in these regions by August 10.

 

The government holds intervention tenders to stabilise domestic prices, buying grain when prices are falling following a bumper crop and selling it to keep prices down if crops face setbacks, as in this year when drought hit 23 regions.

 

Currently, the drought is estimated to have destroyed crops on more than 10 million hectares, about one third of the area sown in these regions, according to data by the Agriculture Ministry.

 

Skrynnik declined to give a new 2010 grain crop forecast. Under the latest official estimate it may fall below 85 million tonnes from 97 million in 2009, although analysts believe the crop may fall even lower.

 

She did not disclose a new estimate of the country's exportable grain surplus, previously estimated at 20 million tonnes. But this was calculated on the basis of carryover stocks of 24 million tonnes.

 

Meanwhile, Skrynnik said the official estimate of the stocks as of July 1 had been lowered to 21.7 million tonnes.

 

The rules of the intervention sales tenders by the National Mercantile Exchange in charge of the tenders said that the government plans to sell essentially feed wheat and barley harvested in 2008 and only some milling wheat harvested in 2005.

 

Only domestic animal breeders, animal feed makers, grain growers and millers are allowed to bid at intervention tenders.